Everyone meet kevin here. Is this the moment of truth? Is this the start of another lehman brothers style great recession? Will this be the start of contagion and, of course we are talking about the evercraft collapse. Folks, we're going to talk about everything that's going on in just a moment after i mentioned that you can get 40 off the amazing programs on building your wealth via the links down below including stocks and psychology of money. Where i give you alerts for any time i buy or sell stocks which last week i did a chunk of selling might even do a little bit of selling today to prepare for a potential bigger debt.

We'll talk about those strategies and some of my thoughts in this video, let's get right into it. Chinese real estate, developer ever grand is on the brink of bankruptcy and could default on its debt. Now this company is the second largest real estate developer in china and it's drowning in debt. The stock was down as much as 16, while the chinese stock market was open and is down.

Over 90 over the last year, went from like a 22 stock to like a two dollar stock. Now remember folks, this is a real estate developer. I know a lot about real estate development. You can't just take real estate, that's under development and then all of a sudden go hey.

Does anybody want to buy it because nobody wants to buy stuff? That's under development. People want finished products. If you have supply chain shortages - and you can't finish your development as fast as you thought you could and all of a sudden, you got to make a bunch of debt payments. But you haven't started selling properties because you're getting delayed for mismanagement or supply chain shortages or whatever reason you screwed and interest payments on a lots of loans are due today monday, with some more deadlines coming up this thursday.

So we've got some big deadlines coming up, especially given the fact that they have 300 billion dollars of debt, that's billion with a b, bravo billion dollars of debt that they cannot pay off. This is leading some analysts to describe this evergrand crisis, as quote china's lehman brothers moment, a huge, obviously, slap back to 2008 and the question now is evergrand too big to fail. That is, will china bail it out me thinks not, but we'll talk more in just a moment about that bailout possibility. Let's talk about this a little bit more in detail.

The company shocked this mark at the market this week by admitting that well a they can't pay off their debt due on thursday and with some payments due today and uh. The fact that at the same time as we've got this evergreen disaster, we have on wednesday federal reserve chairman jerome powell reporting on fomc meeting and talks about tapering. So this is going to lead to a lot of uncertainty in the market this week and guess what happens when there's uncertainty in the market? You've got a massive company with 300 billion dollars of debt and tons of bonds outstanding, which are known as commercial paper which are held by companies throughout the country and a world. What happens when we get double forms of uncertainty? Well, stocks usually go down.

Volatility usually goes way up. Usually a strategy involves selling at the beginning of the pain of uncertainty and then buying back but timing. The market is usually a little risky, we'll talk about that in just a moment, but the fact that evergren also cannot pay off or offload its assets is another big issue see they got 300 billion dollars of debt. They've got 200 million dollars of assets, but a lot of their assets are literally real estate.

Real estate is relatively illiquid, especially if it's not built yet it's one thing: if you have a single family house and there's a tenant in it, paying rent and it's an occupied house, it has a furnace, it has a kitchen. It's quite another thing when you have shells of properties and people waiting but can't buy the properties yet, even though they want to buy the properties because they're still under development. This has now led ever grant to get new price targets of literally a big fat zero dollars. The company has now warned its investors twice that it is going to default on its loans.

This is now the most indebted property developer in the world, but who cares right? Just let the property company go bankrupt and forget about it right? Well, not so fast, because guess who gets screwed banks who made investments get screwed, which means they have to sell and dump other assets and investments to make up for the losses which means they sell other stocks, other bonds when they sell other bonds. Other people sell their other assets and potentially even dump cryptocurrencies. The same thing, though, is also true for home buyers. What happens to home buyers who have put deposits on these properties or other property buyers who have put deposits on these properties? These deposits now get tied up because the company's gone bankrupt.

This means people have lost their money and now potentially have to sell other assets to come up with new down payments to go, buy other properties, but it's also it's not just banks and home buyers or property buyers. It's also suppliers who could potentially be getting screwed in that maybe they've already delivered materials or provided contracting services, but now can't get paid because the company is bankrupt, they're illiquid, given the fact that real estate represents 29 of economic output in china. Many are now wondering if china is actually going to bail this company out, as it's potentially too big to fail, given that it is now the largest well second largest real estate developer, but most indebted real estate, developer and uh. The company might also, of course, be trying to convince the government to bail them out, but in the meantime, working with suppliers and contractors to maybe even go as far as accepting properties as payment to try to somewhat stay alive like hey rather than us, paying you In money that we don't have, why don't we just give you the properties? Well, at the same time, we hope that the chinese government bails us out.

Ccp obviously, doesn't want a sector of the real estate market to collapse, but then, on the flip side, ccp also doesn't want to come across like what the united states did and start bailing out companies that are just deemed too big to fail. It is a communist company or a company's country, so in my opinion, if the ccp were to bail out this company, they probably would bail them out by taking ownership of the company at a massive discount. I mean the first people who are going to get wiped are going to be stockholders in this stock. This this company is probably going to go to near zero dollars, especially if the ccc the ccp comes in to bail them out.

I think ccp coming to bail this company out means their valuation is going literally into the freaking toilet, the chinese communist party. They know how to drive a hard bargain. Okay, they're not going to bail this thing out at desirable terms and they're going to be a lot harsher in a bailout than, in my opinion, the united states government was in 2008.. So, in the meantime, this is why the company is trying to just dump properties and say hey instead of me, paying you, why don't you just take the property, and i mean the easiest way to consider.

This is just look at the way real estate works. Let's say you have a house worth two hundred thousand dollars and i owe you a hundred fifty thousand dollars uh. What if i just said to you like hey, do you want the house? Well, ordinarily, you might think sure i mean if i take a 200 000 property and i sell it after fees - maybe i'll get 180 000 right, okay, well, fair! Then you'd still be up a little bit right. But what happens if so much real estate now gets dumped that that property is no longer worth 150 000, but it's worth 120 000, because we've now led to a real estate collapse thanks to evergren's disaster, which who knows how that's going to affect global real estate Values big question: nobody knows so reality here is when a company starts trying to give away its properties at substantial discounts.

You know they're screwed, like really badly screwed. I think there's no question at this point: how badly they are. Screwed now also worth suggesting that uh right now a restructuring is possible and this could potentially mean some form of debt refinancing uh, maybe other uh. You know companies come in and say hey.

Why don't? We just refinance the 300 billion dollars of debt. You have uh at uh, you know some form of discount to the existing debt holders. There'd be a lot of negotiations related to this uh, but uh nothing's going to be desirable for the company. There is no desirable option for the company here and there are going to be a lot of people who lose money, and - and this is where i think it's worth talking about - the contagion that we could see in the broader stock market around the world and how We should potentially prepare ourselves for buying opportunities, not just in stocks but also in crypto, see endless companies and even tether hold debt in companies potentially like evergreen, and this is why we might be seeing prices in crypto fall, maybe because, as these bonds become worthless, maybe Tether holdings are becoming a little less worth worthwhile uh.

But beyond that, i really think one of the big reasons we're seeing drops in the stock futures stock prices here shortly and crypto prices is because institutions who make up 70 of even crypto trading are probably dumping to prepare for the contagion that that is likely to Come out of uh this evergreen disaster? Now again, we could, in you know five hours, wake up to news or just be have a cup of coffee to news that all of a sudden uh. This solution has been solved and some kind of uh restructuring deal has been met and and the crisis appears that it's likely to be averted, and i would expect we'll see a very quick u-turn in the stock market and in the crypto markets. But in the meantime, it does seem entirely possible that it might not be a bad idea to take some potential higher risk investments, uh sell them while well, you know you still have gains or you're gon na break even or whatever and potentially hold those just. So you have ammunition to buy the dip in other opportunities.

Now i personally would not recommend liquidating my entire portfolio. I would take some of my portfolio - maybe sell a little bit so that i could re-buy. But again, you'll have to be very, very quick because you could miss the dip and uh and you could miss the bottom and end up buying higher than where you were. But i think if your intention is to rebuy, i think there's a big trade opportunity here.

Whether it's in crypto or stocks - and i don't believe that's paper - handy, i believe - that's that's called trading but again trade with a trade portion of your portfolio, not your entire portfolio. Of course, anytime i buy or sell. I will send alerts, as i always do in the stocks and psychology money group linked down below. Something else to consider is that we can also hear that everground will be uh kept alive in some form of zombified form, where, basically, we know that they can't continue to make their payments, but maybe we can get the company to finish building their 1.4 million homes.

That the company has already pre-sold and if they they finish, building these homes, then then those homes could be sold. The big question here is: will suppliers and contractors actually be willing to complete those homes, and i believe that is going to be a quite a big ask. I i don't think keeping the company alive in a zombified form will create a lot of confidence in contractors or even home buyers. I i would personally expect that if the company were to be announced to hey we're going to survive in a zombified form just to finish, building these homes, i would expect a lot of home buyers to just want their deposit back and i think a lot of Contractors won't actually work for the company, so i'm not super enthused about this.

I really don't see anything good coming out of this. I think this situation is likely to get worse before it gets better. I would not touch this stock with a 10-foot pole. I also expect there to be more chinese regulation coming on other companies, and i really think that this sort of collapse here it will be a motivating factor for more pain for wind, for example, in macau related stocks uh in casino regulation.

I think there'll be more pain for the alibabas uh in njd.com of the world, because china's not going to want to see an evergreen happen all over again. I think they're going to try to be even more aggressive on the regulation and their crackdowns because of this going on and again the pain in the chinese markets will be felt globally, and i do think that institutions will pursue a substantial amount of selling to prepare For this, this potential buying opportunity, because that's what i really see this, as i don't see this as a broader systemic issue for the united states stock market beyond uh, a painful dip, a painful dip that will be an opportunity, uh and uh, and then we'll move On we'll recover from that uh from that dip, but i do not see this as a systemic issue for our stock market. I think uh, and i hope that this will just be another. Arcade goes where you have the uh ghost disaster.

A bunch of people lose billions of dollars, and then we move on it's an expectation that i have i'm willing to trade. This i'm willing to dump uh certain stocks in certain crypto and uh, be prepared to essentially buy the dip and uh buy back at cheaper prices, uh again, not with my entire portfolio, but some of my portfolio. Yes, so thank you very much for watching. I appreciate all of you if you like this kind of content, consider subscribing get my buy and sell alerts linked down below and folks, we'll see you in the very next video thanks again, you.